The UK government was forced to withdraw the Financial Services (Implementation of Legislation) Bill after it was ‘hijacked’ by a cross-party amendment that would have required the Crown Dependencies to introduce publicly accessible registers of beneficial ownership of companies by 2020.
The Bill, a planning measure designed to enable the UK to adapt to changes in EU financial services legislation in the event of a ‘No-Deal Brexit’, was due to be debated in the House of Commons on 4 March but the legislative amendment was tabled by a group of MPs, which the government expected to lose.
The group, led by former Conservative minister Andrew Mitchell and Labour MP Margaret Hodge, succeeded last year in attaching an amendment to the Sanctions and Anti-Money Laundering Bill to impose a requirement for “publicly accessible registers of beneficial ownership of companies” on British Overseas Territories (BOTs).
As a result the BOTs, which include Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar and the Turks & Caicos Islands, are required to introduce publicly accessible registers of those with significant control over companies by 31 December 2020. This requirement does not currently apply to the Crown Dependencies of Jersey, Guernsey and the Isle of Man.
Mitchell said: “This amendment is an important continuation of the G8 agenda on transparency and openness to combat money laundering and tax evasion. In the face of certain defeat the government has pulled the business for today but the business will return and so will this important amendment. Parliament decided last year that the British Overseas Territories should adopt open registers of beneficial ownership and so now should all members of the British family.”
A Treasury spokesman said: “The beneficial ownership amendments were tabled on Thursday, and we want to give them proper and thorough consideration. The government will not move the bill today but will reschedule it to ensure that there is sufficient time for proper debate.”
The governments of Jersey, Guernsey and the Isle of Man welcomed the decision, claiming that such legislation would be “inoperable” and adding that they already had “robust” arrangements for sharing information about the beneficial owners of companies with tax authorities and law enforcement agencies.
“This deferral provides the opportunity for meaningful engagement with UK Ministers and parliamentarians on the matter of public registers of beneficial ownership, in a way that does not contravene the well-established constitutional relationships between our Islands and the Crown,” they stated.
“All of the Crown Dependencies observe the highest standards of financial services regulation and transparency. We are committed to exchanging adequate, accurate and current information on beneficial ownership to combat tax evasion, money laundering and corruption. Our track records on this matter, including the Exchange of Notes agreement we entered into with the UK in 2016, demonstrates that commitment.”
Sovereign regards transparency as a good thing but the BOTS and Crown Dependencies have already agreed to keep a central register of beneficial ownership that is accessible to law enforcement within an hour and the playing field should be level globally.
The UK introduced a public register of ‘persons with significant control’ in 2016 but recent analysis by campaigning organisation Global Witness revealed that thousands of UK companies are filing highly suspicious entries or not complying with the rules. The big difference is that anyone can open a company in the UK, whereas people opening companies in the BOTS and Crown Dependencies are required to go through a licensed operator.